Tankless Water heater Inflation Reduction Act of 2022

[Haijan]

I am planning to install a tankless water heater at my house.  Should I wait to install till Jan 2023 to get a tax credit up to $2000?  Can I install it in Dec 2022?

[johnd84]

Thanks for your question.

It really depends on whether you want to claim the credit on your 2022 return or 2023. The credit exists up to 2033. https://blog.turbotax.intuit.com/health-care/inflation-reduction-act-of-2022-52555/ 

Do take a look at https://www.kiplinger.com/taxes/605069/inflation-reduction-act-tax-credits-energy-efficient-home-imp... as the credit could be lower in 2022 than in 2023 depending on the cost. Also check out https://whttps://www.energystar.gov/about/federal_tax_credits/non_business_energy_property_tax_credi... to make sure your heater qualifies. 

[johnd84]

I want to clarify in 2022 you are limited to a $500 lifetime limit, so it will likely be better for you in 2023 since this limit does not apply but that just depends on all the factors.